When you pay tax on an off-plan home

Terms used

• IVA — IVA is Spain's value-added tax, added on top of the price of goods and services, including a new home.
• AJD — AJD is stamp duty on notarial deeds, set by each region and charged on the sale deed's price.
• IGIC — IGIC is the Canary Islands' indirect tax, charged there instead of IVA.
• VPO — VPO is protected housing, a state-regulated home type with price limits and sometimes lower tax.

Key rules

• IVA: The first sale of a new home pays 10% IVA on top of the price, and each stage payment carries that IVA when you pay it.
• Stamp duty: You pay AJD once, on the sale deed, at your region's rate.
• Mortgage deed: The bank pays AJD on your mortgage deed, not you.
• Canary Islands: You pay IGIC instead of IVA there, and the deed's AJD is 0.75%.

IVA comes with every payment, not at the end

You pay 10% IVA on top of the price, and each stage payment carries that IVA when you pay it. Do not wait for delivery to see the tax bill. Each instalment arrives with an invoice from the developer showing the price part and the IVA part.

The developer passes the IVA to the tax office. Your job is to pay it with each instalment. The balance you pay at the deed also carries its IVA.

Budget tip: add 10% to every payment in your schedule, including the reservation and the construction-stage instalments.

Garages and plots can have a different rate

• Up to two garage spaces bought together with the home are taxed at 10%.
• Additional garages are taxed at 21%.
• A plot or building land is taxed at 21%, unless the land is rustic.
• Protected housing (VPO) can be taxed at 4%.

Ask the developer to show the rate on each line of the contract before you sign.

Stamp duty (AJD) falls on the deed

Stamp duty is called AJD. You pay it once, when you sign the sale deed at the notary, and it is charged on the price. It is not spread over the stage payments.

Each region sets its own rate, so the figure depends on where the home is. Typical rates are:

• 0.75%: Madrid and Castilla-La Mancha
• 1%: La Rioja
• 1.2%: Andalucía, Asturias and Baleares
• 1.5%: Aragón, Cantabria, Castilla y León, Cataluña, Comunidad Valenciana, Extremadura, Galicia and Murcia
• País Vasco and Navarra run their own regimes, roughly 0.5% to 1%

Some regions give reduced rates to large families, young buyers or people buying a main home. Ask your region's tax office whether you qualify.

Which deeds you pay for

The developer signs other deeds before selling, such as the declaration of new construction and the split of the building into separate properties. The developer pays AJD on those, not you.

If you take a mortgage, the mortgage deed also carries AJD, but the bank pays it. You only pay AJD on the sale deed.

If the home is in the Canary Islands

IVA does not apply there. You pay IGIC instead. The general rate for a new home is 7%, and protected housing is 3%. Garages and plots are generally 7%, with a higher rate in some cases. Like IVA, it is charged on top of the price.

Stamp duty on the deed is 0.75% and the buyer pays it.

When the cash goes out

1. Reservation and private contract: IVA on each payment.
2. Construction instalments: IVA on each one.
3. Deed: the balance with its IVA, plus AJD on the sale deed.

The timeline below sets these steps against your delivery dates. Confirm the final rates in writing with the developer and your region's tax office before you sign.

Plan your stage payments, taxes and delivery dates

Your off-plan cash timeline

• Pay the reservation: At the start, before the private contract: usually 3,000 to 6,000 euros, plus 10% IVA

• Sign the private contract and pay the first instalment: On signing: usually about 10% of the price, less the reservation, plus 10% IVA. Ask for an invoice.

• Pay construction-stage instalments: During construction, monthly or at milestones: usually a further 10% to 30% of the price, each with 10% IVA paid when you pay it. Check each is covered by a bank guarantee or insurance.

• Renew your mortgage offer if needed: If completion is delayed past the offer's validity, often around 6 months. Banks usually give a pre-approval for a few months.

• Sign the deed and draw down the mortgage: At the deed, when the building is finished: the mortgage is normally signed and paid out in full here, covering most of the balance of usually 60% to 70% of the price.

• Pay the balance and its IVA: At the deed signing: the remaining price plus 10% IVA

• Pay stamp duty (AJD): On the deed: set by your region, with a national default of 0.5%. Typical rates run from 0.75% in Madrid to 1.5% in Catalonia and Valencia.

• Pay notary and land-registry fees: Around the deed: typically roughly 600 to 1,200 euros for the notary and 400 to 800 euros for the registry. Ask the notary for a quote. For the mortgage deed, the lender pays the notary and registry fees and you pay the appraisal.

• Take delivery of the home: At or right after the deed, when you receive the keys

Frequently asked questions

What IVA rate applies to a garage or a plot bought with my home?

Up to two garage spaces bought together with your home pay the same 10% IVA as the home. Any extra garage pays 21%, and a plot of building land pays 21% too. Protected housing (VPO) may qualify for 4%.

How much stamp duty (AJD) will I pay on the deed in my region?

The rate is set by your autonomous community, and the national default is 0.5%. Typical rates are 0.75% in Madrid, 1.2% in Andalucía and 1.5% in Cataluña and the Comunidad Valenciana. Some regions give reduced rates to large families, young buyers or primary residences, so ask your regional tax office.

Do I pay AJD on every deed the developer signs?

No, you pay AJD only on the sale deed (escritura de compraventa), calculated on the price. The developer is usually the taxpayer for the new construction and horizontal property division deeds.

Which tax do I pay on a new home in the Canary Islands?

In the Canary Islands you pay IGIC, a local indirect tax, instead of IVA. A new home is generally taxed at 7%, and protected housing at 3%. The AJD on the deed is 0.75%, paid by the buyer.